Kolon TissueGene(950160) failed in U.S. clinical trials for an osteoarthritis treatment, setting off aftershocks. Kolon TissueGene saw its share price plunge a few days before announcing the trial failure, stirring suspicion among shareholders. The company has set up an independent investigative body to determine what happened.
On the 23rd, according to the biotech industry, Kolon TissueGene recently formed an independent task force of fewer than 10 people. Former Financial Supervisory Service officials and attorneys from major law firms are taking part. A Kolon TissueGene official said, "It appears they will identify the circumstances related to the stock price movements."
Kolon TissueGene announced on the 20th of last month that TG-C (formerly Invossa), an osteoarthritis treatment, failed in the first attempt of its phase 3 trial in the United States. Patients reported reduced pain after dosing, but the effect was not better than the placebo.
But the company's share price plunged even before the failure was announced. Kolon TissueGene closed at 77,900 won on the 15th of last month and fell 20% to 62,100 won on the 16th.
Some shareholders are raising suspicions that information on the failed trial may have leaked in advance. Kolon TissueGene set up the task force to clarify the suspicions across the board.
However, Kolon TissueGene says the department handling trial data had maintained the highest level of security. It also strictly prohibited employees from trading the stock.
Kolon TissueGene is currently undergoing a wave of layoffs at its U.S. headquarters. According to the Maryland Department of Labor, Kolon TissueGene plans to cut 37 employees at the end of this month. With a total staff of 68, more than half will be let go. Staff involved in product commercialization and marketing are among those to be laid off.
Kolon TissueGene initially aimed to apply for approval with the U.S. Food and Drug Administration (FDA) next year if there were no issues with the trial results, and to launch the product in 2028. But after the trial failure, it has no choice but to change its business plan. The company says it will flexibly manage staffing by using outsourcing going forward.
Kolon TissueGene had been conducting two phase 3 trials for the osteoarthritis treatment in the United States. The announcement last month concerned the first trial endpoint, and the second phase 3 endpoint was scheduled to be released in October. Kolon TissueGene said it will delay that announcement to December.
A Kolon TissueGene official explained, "The first phase 3 trial was analyzed in-house," adding, "The schedule was adjusted as the second phase 3 analysis was commissioned to an external institution."
The industry is watching whether Kolon TissueGene can make a comeback after the trial failure.